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Outsourcing and its Changing Pros and Cons

by: Admin

Tuesday, October 13, 2009 |

In a given discussion regarding the outsourcing industry, cities like Manila, Bangalore, and Malaysia would typically be under the microscope. The fact that such a discussion two to three years ago would be completely different today is testament to the speed at which the industry advances and the number of variables it involves. The debates regarding advantages and risks of outsourcing to one city or the other, for instance, is changing for two main reasons: the arrival of new outsourcing locations such as Cebu, and the development of multi-location strategies. Whether it be call center outsourcing, medical transcription, or content moderation, the effects of outsourcing jobs to foreign countries involve new innovations that are shaping the landscape of cities across the globe.

As the current economic crisis extends its blight throughout Asia, it has provided a catalyst to measures undertaken by affected nations to fortify outsourcing capabilities. Given the interdependence of today's global community amid an economic downturn, this has directly influenced decision-makers that weigh the pros and cons of outsourcing. Tier-2 and tier-3 cities within Asia are abuzz as outsourcing jobs to foreign countries continues to prove as the solution for many struggling businesses, namely in the US. Though many analysts have pinned outsourcing as a solution to uplift the standard of living, many who have lost their jobs to foreign countries wonder, how does outsourcing help America?

Advantages and disadvantages of outsourcing

The negative effects of outsourcing jobs is displayed in Forrester Research's dim forecast of 3.3 million service jobs in America going offshore by 2015.  As nations under pressure struggle, new cities are emerging to heed the calls for offshore services at lower costs; as displayed in Tholon's survey of the “Top 50 Emerging Global Outsourcing Cities”. China, which is among the Asian nations suffering the most from the global recession, has begun to provide tax breaks and subsidies to maximize the advantages of outsourcing to foreign countries. Shangai, Beijing, and Ho Chi Minh City all occupy spots in the top five on Tholon's survey. Meanwhile, plagued with terrorists attacks and scandals, India is under pressure to maintain its place as the top destination for outsourcing. Leading the emerging destinations list is Cebu – a city that, only three years ago, had but a few highrise buildings dedicated to call center outsourcing in its central IT hub. Boasting a significantly more affordable labor force, quality graduates, and a relatively relaxed coastal environment, Cebu is currently an outsourcing hotspot with advantages that cannot be ignored.

With more and more quality outsourcing destinations arriving on the scene, the advantages and disadvantages of outsourcing depend highly on what service is to be outsourced. Where once outsourcing jobs to foreign countries meant packaging all services to one city, service providers are now realizing the advantages of utilizing a multi-city model in which specific service lines are assigned to the most suitable locations. Upon weighing the pros and cons, the multi-city model may prove to be far more efficient. This means that there are now “global Business Process Outsourcing providers” that clients can consider, and, more importantly, local providers need to be able to contend with.

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